IBM’s Own Laptop Computer Model Ready to Make Its Debut

In its third attempt to successfully crack the fast-growing laptop computer business, International Business Machines Corp. is expected to introduce today its latest entry into the $5-billion market.

Industry sources said IBM’s PS/2 L40SX Laptop will include a host of attractive features, but its appeal could be limited because it breaks little new technological ground and is comparatively high-priced at $6,000.

The success of IBM’s laptop is important to some suppliers, including Western Digital Corp. in Irvine. Western Digital is supplying logic chips for IBM’s machine and will initially manufacture the main processing boards, or motherboards, for the product.

The market for lightweight computers that pack the power and memory of a desktop computer in a machine that fits inside a briefcase has been growing rapidly, with more than 100 companies already selling laptop models.

IBM’s machine is expected to be a mixed blessing for market leaders Toshiba America and Compaq Computer. While IBM’s entry is expected to expand overall demand for laptops, it is also expected to take sales away from Toshiba, Compaq and others.

Analysts said IBM must compete in the market since laptops are expected to account for one in five personal computer unit sales by 1995. Apple Computer is also planning to introduce a laptop computer in the second half of the year.

Suppliers said IBM has been working on designs for a laptop computer for more than a year. But while IBM worked to refine its laptop design to ensure that it wouldn’t flop like two portable computers the company marketed in the 1980s, dozens of competitors entered the market.

IBM shipped test versions of its new laptop in February and scheduled an announcement for late last month. But IBM was forced to delay the unveiling until this month after encountering a shortage of key disk drives. IBM officials declined to comment on the laptop until after a New York press conference scheduled for today.

The machine is based on the processor of choice for top-of-the-line laptop computers, the 20-megahertz version of the Intel Corp.’s powerful 386SX microprocessor. It also includes a 60-megabyte hard-disk drive--enough to store the complete works of Shakespeare eight times. It also has a black-and-white, liquid-crystal display and a full-size, adjustable keyboard rather than the scaled-down keyboards found on some laptops.

Computer industry observers say those features, while not unique, will compete well with top machines from Compaq and, to a lesser extent, with Toshiba. The machine fits in a subcategory of laptops that weigh less than 8 pounds and are known as notebook computers.

“It’s a jazzy machine with all the features you want,” said Richard J. Martin, an analyst at Prudential-Bache Research in New York. “It is heavier and larger than most notebooks, so the question is whether people will think it is too big.”

Michael Rusert, executive vice president at Computer City Supercenters in Stanton, got a sneak preview of the machine at IBM’s headquarters. He said it was “surprisingly on target.”

“IBM will expand the market, but Compaq and Toshiba could see market share erosion,” Rusert said.

Toshiba America officials seem to be taking IBM’s announcement seriously. The company has been contacting reporters to remind them that Toshiba is still the leading seller of laptop and notebook computers.

Toshiba, which pioneered the laptop computer, would seem to have the most to lose from IBM’s entry in the market, analysts said. But Tom Martin, vice president of marketing at Toshiba America’s Computer Systems Division in Irvine, said his company could benefit if IBM’s product heightens consumer awareness of laptops.

“It’s nice to have company,” Martin said. “But this is a completely expected move.”

One Wall Street analyst, who asked not to be identified, said IBM’s computer is a “me-too” product and, at $6,000, is more than double the price of similar machines from other manufacturers.

“It will have some success because of the IBM name,” he said. “But the impact on earnings will be somewhere to the right of the decimal point.”

Safi U. Qureshey, co-chairman and chief executive of AST Research Inc. in Irvine, which also competes in the notebook market, said he believes that the notebook computer market had already achieved critical mass appeal without IBM’s stamp of approval.

“There is nothing here in their product that jumps out as exceptionally different in performance or price,” Qureshey said. “We are not concerned about it.”

IBM introduced its first lightweight computer, the Portable PC, in 1983 to compete with a successful product made by Compaq. But the machine had fewer features than Compaq’s machine and fared poorly in the market.

Three years later, IBM introduced a laptop called the PC Convertible, but it was so large it could not be easily used on airline tray tables. IBM pulled the PC Convertible from the market in 1989 after three years of weak sales.

The computer’s success is not only important to IBM. Western Digital has been the focus of rumors involving the IBM laptop since last summer, when some reports said the Irvine firm would be a major supplier for the product.

In February, Western Digital Chairman Roger Johnson confirmed that the company will supply parts and manufacture some of the main processing boards for the IBM laptop.

Western Digital, which has been struggling lately, is hoping that strong sales of IBM’s laptop will help. The personal computer components manufacturer lost $98.5 million for the quarter ended Dec. 31, attributing most of that deficit to the cost of a restructuring program. The company also cut its work force by 600 jobs.

John Geraghty, an analyst for First Boston Corp. in New York, said the IBM contract could breathe life back into Western Digital’s performance, but how much the company will benefit depends on IBM’s shipment schedule and product demand.

“One product isn’t going to make the company, but it will sure help them,” Geraghty said.

IBM’S LAPTOP

Processor: 20 megahertz 386SX

Data pathway: IBM PC-AT bus

Main memory: 2 megabytes, expandable to 18 megabytes

Display: High-resolution liquid crystal display with 12-1 contrast ratio

Floppy drive: 3.5-inch, 1.44 megabyte

Hard drive: 60 megabytes

Modem: Hayes-compatible internal modem with a 2,400-bit-per-second data rate, expandable to include a 9,600-bit-per-second fax modem

Battery life: Up to three hours

Keyboard: Full-size, 84-key, tilted at a 5-degree slope

Weight: 7.7 pounds

Size: 2.1 inches high, 12.8 inches wide, 10.7 inches deep

Operating system: DOS 3.3 or higher, OS/2 Standard or Extended Edition 1.3

Other features: Serial and parallel ports; plug-in receptacles for external monitor, pointing device and other add-ons; and socket for math co-processor

Price: Slightly under $6,000

Source: Industry analysts